Suppliers seek slice of Indian market

13 July 2009

India's Bharat Heavy Electricals Ltd (BHEL) is planning joint ventures in the nuclear energy sector, including the supply of heavy components. The move comes as Areva of France pushed forward its development plans in India.

Speaking to the Business Standard, Ravi Kumar, the company's chairman and managing director, said that the company had decided to invest 10 billion rupees ($200 million) in a castings and forgings joint venture. BHEL is in discussions with Areva and India's Bharat Forge regarding that joint venture, Kumar said, adding that Sheffield Forgemasters of the UK will be a technical partner.

Areva signed a memorandum of understanding (MoU) with Bharat Forge in January to set up a manufacturing facility for heavy forgings in India. The plant is expected to begin operating by 2012 and to supply 8-10 forgings during the first year of operation.

According to Sushil Kumar Chadda, an advisor to Bharat Forge, Areva will invest over 20 billion rupees ($400 million) in two shell companies. Bharat Forge will hold a 51% in the first shell company, which will manufacture steel smeltings and forgings, while Areva will hold a 51% stake in the second shell company, which will set up assembly lines for the finished nuclear forgings, Chadda told the Business Standard. He said that both facilities would be built in a coastal area and that the partners had shortlisted Dahej in Gujarat, and Krishnapatnam and Visakhapatnam in Andhra Pradesh.

Areva said it has "just entered into a strategic alliance with Bharat Forge by signing an agreement which lays down the main conditions of the joint venture." In a statement, the company added, "The agreement marks an important milestone as legal agreements can now be drafted, the industrial tool determined and a site acquired."

BHEL set up a joint venture in 2008 with Heavy Engineering Corp (HEC) for producing castings and forgings for nuclear power plants, based on upgrading HEC's plant. BHEL was planning to set up a greenfield manufacturing base in India for nuclear forgings and was in talks with UK-based Sheffield Forgemasters and Japan's Kobe Steel for possible joint ventures in nuclear forgings.

However, in March 2009, BHEL said it was likely to join the Areva-Bharat Forge joint venture to produce nuclear castings and forgings, instead of going it alone, this intention being confirmed in July. Shortly after, it announced a ten-year technology transfer agreement with Sheffield Forgemasters for large power plant components.

BHEL has also initiated talks with companies such as Areva, Toshiba of Japan, Westinghouse of the USA and GE Hitachi for constructing nuclear power plants, Kumar said.

The company is close to finalizing a European partner for an existing joint venture with Nuclear Power Corp of India Ltd (NPCIL). The BHEL-NPCIL joint venture is for the supply of turbines for nuclear plants of 700 MWe, 1,000 MWe and 1,600 MWe. Kumar said that the partner would bring in technology and get a 30-35% stake in the joint venture to build steam generator for nuclear power plants. Kumar said that an announcement was likely by the end of July.

Areva has announced that it has offered to design and construct two EPRs for the Jaitapur site in Maharashtra state. Commissioning of the units is scheduled in late 2017 and late 2018. NPCIL is considering up to six EPR at the Jaitapur site and signed a memorandum of understanding with Areva in February to begin technical cooperation towards such a project.

"To move this ambitious program forward rapidly, Areva has submitted an early works agreement to NPCIL to launch initial design and book the manufacturing capacities needed for the major components," Areva said.

Areva also announced that it has finalized the terms of a framework agreement with the Indian engineering company TCE Consulting Engineers Ltd, a subsidiary of the Tata Group. It said that this agreement for the supply of engineering services will be signed shortly. Tata said two years ago that it was in talks with Areva about sourcing nuclear power equipment.